Amazon and Whole foods announced that the online marketplace's acquisition of the specialty food retailer will officially close on Aug. 28. But the real surprise came with the news that as the first initiative of their combined vision, Whole Foods will offer lower pricing on a selection of best-selling grocery staples.
In addition, the two tech teams are integrating Amazon Prime into the Whole Foods POS system so that Prime members can receive special savings and in-store benefits.
The ultimate goal, according to Jeff Wilke, CEO of Amazon Worldwide Consumer, is to make healthy and organic food affordable for everyone.
“We will lower prices without compromising Whole Foods Market’s long-held commitment to the highest standards,” he said. “We will make Amazon Prime the customer rewards program at Whole Foods Market and continuously lower prices as we invent together. There is significant work and opportunity ahead, and we’re thrilled to get started.”
Other integrations include the availability of 365 Everyday Value, Whole Foods Market, Whole Paws and Whole Catch private label products for sales through all of Amazon's programs. And Amazon Lockers will be set up at select Whole Foods stores for BOPIS orders.
According to Greg Portell, lead partner in the retail practice of global strategy and management consulting firm A.T. Kearney, the integration of Amazon Locker and Whole Foods will enhance the ease with which consumers can interact with Amazon, in other words, moving Amazon closer to the reality of frictionless commerce.
But what does this merger mean for the rest of the grocery industry?
"The speed with which Amazon intends to adjust pricing across the Whole Foods network will force changes in the way the industry operates," Portell told FierceRetail. "The complexity associated with traditional grocers makes it difficult to adjust pricing quickly. If Amazon is able to translate their dynamic pricing capability to the physical stores, traditional grocers will be under pressure to match that ability—regardless of whether they match prices."
Beyond the pressure this means for other grocers, the merger is also a signal of good things to come for consumers. If Amazon is soon able to achieve a seamless view, traditional retailers will also be pressured to "stop viewing their worlds by channel," he said. "The completion of this deal kills the typical view of retail being delineated by channels."
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Amazon has reported that Whole Foods management will stay in place, with John Mackey remaining as CEO at its headquarters in Austin, Texas.